Sacra Logo
Q&A >

What is the impact of third-party ordering on restaurant economics, and how have these economics been impacted by the pandemic?

Hadi Rashid

Co-founder at Lunchbox

When restaurants tried to reach out and find a way to engage their customers, they realized that customer data was missing. It also made them cost conscious. I'm sure there are operators today, who are looking to cut as many costs as they can, especially in software. That's when they realized, "We're paying a lot in fees. That's the cost of operating on that platform. How can we make that money back?" 

What they ended up doing was get on a slippery slope. While some operators today might not be losing money anymore when operating on these third party platforms because they increase the price of the item based on whatever they're getting charged, what a lot of people don't realize is restaurants are falling under this guise of, “I'm making my money back, but that extra 20-30% on my base price, now, I might be pricing out the consumer.”

Where someone was transacting twice a month before, they might be transacting once a month now. But again, because I don't have access to the data, I don't know if that consumer's coming back. For the first party though, those costs are fixed. 

Lunchbox charges a SaaS fee and then, processing to obviously process an online ordering transaction. Those costs are fixed and don’t change. If you make more money, that cost remains the same. It’s not percentage based, it's not punishing you for doing well. Then, what it does is from the guest side, you have a cheaper price for your first party ordering solution. Since you're not paying 20-30%, there's no reason to price your consumer out on the first party solution. 

When you add things like Loyalty, you're now rewarding guests for transacting on your platform more often. So, there's different ways to reward with price and loyalty on the first party, which again, doesn't hurt your margins. The third party has to update that price, but then, they price out the consumer.

Find this answer in Hadi Rashid, co-founder of Lunchbox, on vertical SaaS for restaurants
lightningbolt_icon Unlocked Report